SAT lowers penalty on Mercury Fund Mgmt

While the Mercury Fund Management would still have to pay a penalty of Rs 17 lakh,SAT in its order today said that it is setting aside the penalty for Rs 10 lakh on the entity.

Sebi could initiate fresh proceedings against it,if considered necessary,it added.

The tribunal said Mercury Fund Management,which is alleged to have facilitated Gennex Laboratories and its director Vinod Baid in offloading their shares in the market,has been punished but action is yet to be taken against the company and its director who are the main culprits.

“We… set aside the penalty of Rs 10 lakh imposed on the appellant (Mercury Fund Management)… with liberty to the Board to initiate fresh proceedings against the appellant,if considered necessary,in case the company and Vinod Baid are ultimately found guilty…,” the SAT order said.

The appropriate course for Sebi would have been to initiate proceedings simultaneously against all the entities,which has not been done in this case,it added.

“It may be possible that in the proceedings which have been initiated against the company and its director Vinod Baid …the Board may come to a conclusion that it does not call for any penalty or these entities may be let off with a lower punishment like warning,” Sat added.

The tribunal directed Sebi to complete the proceedings against the company and Baid,and thereafter take a decision relating to “acts of commission or omission” on the part of Mercury Fund Management.

In its probe related to shares of Gennex Laboratories,Sebi had found that during April-December 2007 shareholding of promoters group changed from 53.62 per cent to 24.72 per cent of the paid up capital resulting in change of shareholding to the extent of 28.90 per cent.

It happened because all the promoters including Mercury Fund Management had sold or transferred their shares. The entity had received 9,60,000 shares in off-market on July 4,2007 from Vinod Baid.

Mercury Fund Management as required under the norms failed to make disclosures under the insider trading rules and acted as a facilitator to Vinod Baid in offloading the shares of the company in the market.